ObamaCare's Flaws Cannot Be Ignored Indefinitely
November 13, 2013
Experts on both sides agree that the Affordable Care Act (ACA) has substantial flaws. A host of new problems will be uncovered as the exchange process gets under way over the next year. Some of those problems arise from a poorly constructed law; others, from poorly thought-out changes that are promulgated by subsequent regulations and administrative actions, says Joseph R. Antos, the Wilson H. Taylor Scholar at the American Enterprise Institute.
- The ACA is remarkable for remaining consistently unpopular with the public.
- A recent NBC News-Wall Street Journal poll taken in July 2013 shows that 47 percent of those polled think that the new law is a bad idea compared with 34 percent who support it.
The prospect of new taxes and higher costs has caused many employers to take a second look at the way they manage their employee benefits. As a result, workers will pay more for less generous employer coverage.
- The recent decision by the Obama administration to delay the employer mandate by one year does not change the incentive that some firms have to cut back on their workforces.
- In fact, it gives firms more time to map out a strategy to avoid the steep penalty that will be levied if even one of the company's employees receives an exchange subsidy.
Premium rates that have been approved thus far in several major states are substantially below the levels that health plans requested. In many cases, those rates can be expected to rise sharply in future years.
- Insurers have an incentive to underprice their products initially to attract market share, and they are well aware of the prevailing political climate that demands low premium increases in the exchanges.
- But at some point they have to make a profit or drop out of the market.
There will be a shakeout of the insurance industry over the coming years, as more experience is gained about exchange operations and regulators face business reality. Consequently, the ACA will not be the success its supporters want it to be. It also will add to the growing fiscal burden that threatens to damage the health of the economy. Congress and the president will not be able to ignore those facts indefinitely.
Source: Joseph R. Antos, "Fall Follies: The ACA Lurches into Operation," American Health & Drug Benefits, September/October 2013.
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